CONSTRUCTION AR AGING,
EXPLAINED.
An AR aging report buckets unpaid invoices by how long they've been outstanding, typically current, 30, 60, and 90-plus days, so a subcontractor can see collection health at a glance. A healthy portfolio has most balances in the current and 30-day buckets; a growing 90-plus bucket signals a collection process that isn't catching drift early enough.
An AR aging report is one of the simplest financial documents to produce and one of the most revealing to actually read. It takes every open invoice and sorts it by how long it's been outstanding, current, 30 days, 60 days, 90 days or more, turning a single AR total into a picture of exactly where collection is working and where it isn't. Most subcontractors generate the report but don't read it closely enough to catch the pattern before it becomes a cash problem.
READING THE REPORT.
The current bucket holds invoices not yet past their due date. The 30-day bucket holds invoices one billing cycle overdue, still generally normal depending on the GC's terms. The 60-day bucket signals a collection issue starting to form, and the 90-plus bucket represents invoices where the standard follow-up process has clearly failed to collect on schedule.
A healthy aging report shows the large majority of the total AR balance sitting in current and 30-day buckets, with only a small percentage in 60 and 90-plus. A report where a meaningful share of the balance sits in 90-plus is the clearest single signal that the collection process, not the client base, needs attention.
THE SUMMARY NUMBER.
Days Sales Outstanding, DSO, is the single number that summarizes the aging report: on average, how many days does it take to collect an invoice. 45 days is the CFOS target for a well-run subcontractor, with 30 days representing a strong position and 90-plus signaling weak collection discipline.
DSO and the aging report tell the same story from two angles. DSO gives the trend at a glance; the aging report shows exactly which invoices and which GCs are driving that number up or down.
WHAT MATTERS MOST.
WHERE IT GOES WRONG.
Common belief: "We look at our total AR balance, that's basically the same thing."
What's actually true: A stable total AR balance can hide a growing 90-plus bucket if new, current invoices are replacing collected ones at the same rate old ones are aging out. The bucket breakdown is what actually reveals the trend.
Common belief: "We only pull the aging report once a year, at tax time."
What's actually true: An aging report reviewed once a year misses months of drift that could have been caught and corrected with a monthly follow-up cadence.
Common belief: "Some of our AR is old, but it'll get paid eventually."
What's actually true: Invoices in the 90-plus bucket become progressively harder to collect the longer they sit there, and 'eventually' is exactly the assumption that lets a collectible invoice quietly become uncollectible.
FREQUENTLY ASKED.
